Sub-prime lender offers cash-back on mortgage redemptions
One time subprime mortgage specialist, Edeus, has taken the unusual step of offering cash-back to selected customers who redeem their mortgages.
The lender closed its doors to new business last year and has been struggling to sell its loans to investors in mortgage-backed securities.
Much of the debt is in the sub-prime sector and the market for this is virtually dead.
The firm is therefore offering an 8% discount to certain customers who can pay off their loans in full.
Around 400 borrowers could initially benefit from the offer, which includes a waiver of the firm’s normal exit and early redemption charges.
According to Edeus’s managing director, Alan Cleary, a loss will be made on each mortgage but this represents the lesser of two evils because in recent months, the firm has only been able to raise fresh loans by offering steep discounts to multi-national banks.
The scheme may be extend if it proves to be popular and Edeus says it hopes to return to the home loan market at some point in the future but in the meantime is continuing with its mortgage advisory service.